Adding it All Up

Now it's time to find out what you've got and where you are financially.

When you have filled in the sections of a budget table relevant to you, simply make totals of expenditures (including savings and investments) and income, and subtract expenditures from income. If your total is above zero, you are cash flow positive. If the total is below zero, you are cash flow negative. If the total is zero, you are cash flow neutral.

If you end up with a positive cash flow, you can then consider investing the surplus, preferably in real estate, stocks or mutual funds. Or, you can spend it. If you have a negative cash flow, you should examine what non-essential items you can eliminate.

The most common problem people have with budgets is sticking to them. Individuals who aren't very organized by nature need to have a more flexible budget, with broader categories such as "rent, entertainment, groceries and bills" under expenses, rather than more detailed entries.

The last word on your budget. When you first start your budget, you should review it every pay period to see if you're on track. After that, review it when you do it - every month.

Creating a File System